Mismanaged Capital Causes Downward Spiral In UK Real Estate Market

With real estate values looking like they will continue to plummet, many people are trying to determine whether they should buy a property or not. Many experts in the housing and mortgage area of the business say that it would be smart to just rent for a while and see how the market develops. Clearly, those looking to jump into the housing market cling to the hope that downward spiral - brought upon by the irresponsible actions of the lenders - will finally take an upward turn. On the other side of the equation, individuals who have recently entered the housing market with swollen property prices caused by the excess of credit are praying that prices will not fall too much and that interest rates will continue to remain low so that they avoid having negative equity and being unable to make the repayments. Individuals that have been on the market for a while are in a much better position, although interest rates still have an effect on everyone.

Unfortunately, it seems like the very people we charge with being the responsible stewards of capital (ie: bank managers and mortgage lenders) have absolutely no interest whatsoever in the well being of the individuals that they are lending money to. It seems like all they care about is the bottom line - after all, if this was not the case then they would not have been lending money to individuals who could not afford the loans in the first place. But effect is my opinion going to have on these institutions? After all, the managing directors of the banks involved will likely receive a handsome bonus for all of their irresponsibility, and there isn’t really anything that people can do about it. The only thing that people can do is continue to hand over the keys to their homes which are no longer affordable, or make rent payments (that are often even larger than mortgage repayments) preventing them from saving up enough money for a 5% to 10% down payment (not to mention all the extraneous costs that are involved with purchasing a home).

If you omit the wealthiest individuals from the statistics and take a look at the actual earnings for people in this country (meaning in places not experiencing the London bubble) $20,000/year per couple is more common than $20,000/year each. Why are property prices so high in the states they live in then? Once again, we must turn our attention to how the banks have been gambling with our credit to make themselves and their shareholders more money for every sale. They have been simply selling to the highest bidder with nobody, not even the government, taking responsibility and regulating these parts of the economy.